Soaring house prices 'push Londoners into poverty'

High housing costs are the key cause of poverty in London and are helping to push rising numbers of people into “serious” hardship, it was warned today.

A report, entitled London’s Poverty Profile, says that despite the economic recovery, the capital still has a higher proportion of impoverished residents than anywhere else in the country with 2.1 million people affected over the past three years.

It says the causes include the spread of low pay, which has seen the numbers paid below the living wage rise to 600,000, 40 per cent higher than five years ago, as well as benefit cuts and higher unemployment.

But it warns that the cost of housing is the critical factor as spiralling prices in central London have a knock-on effect on rent and mortgage bills across the capital. The report, compiled by the New Policy Institute think-tank, says that the biggest impact of the rising costs is on those renting privately and that 830,000 people in such accommodation are now in poverty.

That compares with a figure of 700,000 for those in social housing who are in poverty — using the Government’s official measure of 60 per cent below the national median income — and a total of 610,000 for poverty among owner occupiers.

Other indicators of the capital’s housing problem cited by the report include a near doubling of the number of rough sleepers in London to 6,400.

The report adds that the Government’s benefit cap will affect Londoners most because of the capital’s high housing benefit costs. It stresses that the situation can be reversed if the methods used to transform London’s education system are replicated.